Largely at the behest of the international community, developing country governments have signed up to a growing number of targets. While input targets can serve as lobbying mechanisms which sectoral interest groups (domestic and external) can use to influence donor and government financial commitments to their sector, it is clearly not possible for all such lobbies to be satisfied simultaneously given that total current government expenditures are well below the level necessary for a country to meet all of the targets. To meet one target through sectoral re-allocation is possible only at the expense of other competing sectors, which are also regarded as priorities and which have their own, internationally agreed spending targets.
In this study, none of the case study countries (Ethiopia, Kenya, Malawi, Mozambique and Uganda) are close to meeting the full set of targets to which their governments have subscribed. In most of the case study countries, most of the targets are in effect unachievable. Education and agriculture are the best funded sectors and social protection the worst in proportional terms, with spending on social protection representing on average only 9% of the target value. Even if all government resources were diverted to these six sectors in the case study countries, the targets could only be met in Kenya. In other countries, increases of up to 22% in government expenditure would be required to finance just the six sectoral targets (assuming that nothing was spent on budget items outside these six priorities). Governments would therefore need significantly larger budgets if they were to simultaneously meet these targets. The absolute resource constraint remains an open
question in the case study countries, given the lack of transparency regarding ‘off-budget’ ODA, which represents a major challenge to good public financial management, and is a major area for potential improvements in donor practice.
If the targets cannot be met through reallocation within current levels of public spending, the alternative is to increase the total resource envelope available to government through increased revenue collection and / or increased flows of external assistance. However, increased revenue generation is not easily achieved in countries with a small domestic tax base, especially when economic growth is slow. How to increase government revenues in developing countries is a major research area in its own right. At the same time, there are limited prospects for a major increase in aid flows as donor nations seek to reduce public spending in the aftermath of the global economic crisis which have resulted in large fiscal deficits within OECD economies.
This study has not focused on outcomes of government or donor expenditure, but instead government expenditure targets and actual spending. An input target can help to alert policy makers
in developing countries and donor partners that additional funds need to be committed to make it possible to achieve development targets. Expenditure targets can be inspiring and can help to improve accountability. However, focussing on expenditure, whether expressed in absolute or relative terms, is not without its pitfalls. There is a fundamental, philosophical problem with all spending-based targets which measure inputs (expenditure) on the implicit assumption that outputs and outcomes rise in a predictable relationship to inputs. In reality, while the input of finance is clearly necessary to achieve results, the relationship is far from predictable. Progress towards ultimate outcomes (such as poverty reduction) depends not only on the commitment of funds to a given sector but also on context (for example, the breadth and depth of poverty and causes underlying it) and the quality of institutions in translating budgets into tangible service delivery outputs.
Input targets have a role to play in i) motivating greater effort in revenue generation (within the boundaries of sound macroeconomic policy) and ii) encourage governments and donors to prioritise spending by reallocating from low to high-priority sectors within existing budgets. While such targets can serve as useful lobbying mechanisms, spending targets should be taken ‘seriously but not
literally’ (Wood, 2004): that is primarily as a guide and motivation for raising and spending public finance. This report does not conclude that such targets should be dropped, but it does caution
against the argument that particular sectoral targets are inherently ‘affordable’ in any objective
sense.
Often it is claimed that developing country governments lack the political will to allocate resources to some sectors. However, this study suggests that the inadequacy of public expenditure in key sectors is also informed by the inherent impossibility of simultaneously meeting the range of international commitments to which developing counties are signatories. One conclusion which could be drawn is that while outcome targets and agreements can serve as useful lobbying mechanisms for sector specific allocations, development priorities and appropriate funding allocations should be set at the national level, and without the pressure of generic sectoral expenditure targets defined at the international level. While activity is taking place in each of the sectors, on the basis of progressive realisation, is it important to reflect that the costs associated with achieving these sectoral targets are not, under current global conditions, likely to be met, and the sectoral outcomes anticipated targets will remain aspirational.
When an overview of the financing requirements of the six sectors is made, as in this paper, it becomes clear that there are no grounds for a realistic expectation that the six development targets agreed across these sectors can be realised in the medium term, due to binding fiscal constraints
Not all international targets are affordable simultaneously, and affordability remains essentially a question of political choice over the allocation of scarce and ultimately inadequate resources. Given the unavoidable overall financing shortfall, the key question becomes prioritisation of the use of existing resources, the opportunity cost of programming outside these sectors and non priority or ineffective use of resources within the sectors.
References
AfricaSan (2008). The eThekwini Declaration and AfricaSan Action Plan. Downloaded from
http://www.wsp.org/UserFiles/file/eThekwiniAfricaSan.pdf
African Union (2001) Abuja Declaration on HIV/ Aids, Tuberculosis and Other Infectious Diseases. Downloaded from http://www.un.org/ga/aids/pdf/abuja_declaration.pdf
African Union (2003) Conference of Ministers of Agriculture of the African Union Report of the Ministers of Agriculture. Downloaded from http://www.africa-
union.org/News_Events/Calendar_of_%20Events/AGRICULTURE/Report- MinistersofAgri%20july%201-2%20%202003.pdf
African Union (2008) Sharm El-Sheikh Commitments for Accelerating the Achievement of Water and Sanitation Goals in Africa. Downloaded from
http://www.unsgab.org/news/docs/080701_AUDeclarationSeS.pdf
African Union (2008) Social Policy Framework for Africa. Downloaded from
http://www.un.org/esa/socdev/egms/docs/2009/Ghana/au2.pdf
African Union (2009) Assembly of the African Union 12th Ordinary Session Decisions, Declarations, Message of Congratulations and Motion. Downloaded from http://www.africa-
union.org/root/UA/Conferences/2009/Jan/Summit_Jan_2009/doc/CONFERENCE/ASSEMBAS%20AU %20DEC%20%20208-240%20%28XII%29.pdf
Bruns, B., Mingat, A. and Rakotomalala, R. (2003) Achieving universal primary education by 2015: a chance for every child. World Bank, Washington DC, USA
Christiansen, K. et al. (2007) ‘Interim Report of the Uganda Donor Division of Labour Exercise’
London: ODI
Commission on Macroeconomics and Health (2001) Macroeconomics and health: Investing in health for economic development. World Health Organization, Geneva, Switzerland.
Devarajan, S., Miller, M. and Swanson, E. (2002) Goals for Development History, Prospects, and Costs. Policy Research Working Paper 2819, World Bank, Washington DC, USA. Downloaded from
http://www-
wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2002/04/26/000094946_0204180 4272578/Rendered/PDF/multi0page.pdf
Education For All Fast Track Initiative (2009) Financing and FTI Trust Funds. Downloaded from
http://www.educationfasttrack.org/faqs/#faqSix
EURODAD (2008) Old Habits Die Hard: Aid and Accountability in Sierra Leone Brussels: EURODAD Fukuda-Parr, S. (2010) Accelerating progress or achieving the targets: a human rights approach to using MDGs. Presentation at CPRC International Conference 2010, Ten Years of War Against Poverty. 8-10 September, 2010, University of Manchester.
Foster, V. and Briceño-Garmendia, C. (2010). Africa’s Infrastructure: A Time for Transformation. World Bank, Washington DC, USA
Infrastructure Consortium for Africa (2010) Challenge Why More and Better Infrastructure. Downloaded from: http://www.icafrica.org/en/infrastructure-issues/aims1/
International Budget Partnership (2008) Open Budget Index 2008, Washington DC: IBP
International Labour Organization (2008) Can low-income countries afford basic social security? Social security policy briefings Paper 3, Social Security Department, International Labour Office, Geneva, Switzerland.
International Labour Organization (2010) Extending social security to all A guide through challenges and options, Social Security Department, International Labour Office, Geneva, Switzerland.
Kisero, J. (2008) Aid Cut By Donors Likely To Result In Budget Shortfall, Financial Instability By The East African Page: 2 on Tue 22nd January 2008
http://www.marsgroupkenya.org/multimedia/?StoryID=208415&p=Ministry+of+Lands+and+Settlem ent&page=2
Miller, M. (2010) Private correspondence on Malawi budget
Mokoro Ltd (2008) Bringing Aid on Budget Synthesis Report, Pretoria: CABRI
Moon, S. (2010) Practical Approaches to the Aid Effectiveness Agenda: Evidence in Aligning Aid Information with Recipient Country Budgets, London: ODI.
Moon, S. and Williamson, T. (2009) Greater Aid Transparency: Crucial for Aid Effectiveness, London: Overseas Development Institute
Okudi, R. (2010) private correspondence on Uganda budget
Republic of Kenya (2010c) Medium Term Expenditure Framework 2010/11 – 2012/13 Report for the Agriculture and Rural Development Sector, January 2010.
Rosegrant, M., Ringler, C., Benson, T., Diao, X., Resnick, D. Thurlow, J. Torero, M., Orden, D. (2006) Agriculture and achieving the Millennium Development Goals. International Food Policy Research Institute (IFPRI)
Sachs, J., McArthur, J., Schmidt-Traub, G., Kruk, M., Bahadur, C., Faye, M. and McCord, C. (2004a)
Ending Africa’s Poverty Trap. Brookings Papers on Economic Activity 1:2004. Downloaded from:
http://muse.jhu.edu/journals/brookings_papers_on_economic_activity/v2004/2004.1kremer.pdf
Sachs, J., McArthur, J., Schmidt-Traub, G., Kruk, M., Bahadur, C., Faye, M. and M. Kruk, (2004b) Millennium Development Goals Needs Assessments Millennium Project Working Paper, downloaded from http://www.unmillenniumproject.org/documents/mp_ccspaper_jan1704.pdf#
Schiavo-Campo, S. and Tommasi, D. (1999) Managing Government Expenditure, Asian Development Bank.
Singh, R. Ellis, K, Highton, N, Toranzo, G and Wathne, C. (2008) Public Expenditure Composition & Flexibility: Phase II, Overseas Development Institute, London (unpublished).
Tavakoli, H. and Hedger, E. (mimeo) ‘Public Expenditure Analysis in Malawi: Trends Performance’ London: ODI
Uganda Ministry of Finance Planning and Economic Development (2008) Background to the Budget 2008/9, Kampala: MoFPED
United Nations (2005) Millennium Development Goals Indicators. Downloaded from
http://unstats.un.org/unsd/mdg/SeriesDetail.aspx?srid=580
United Nations Development Programme (2006) Human Development Report Beyond scarcity: Power, poverty and the global water crisis. United Nations Development Programme, New York, USA.
Waldman, M. (2008) Falling Short: Aid Effectiveness in Afghanistan, Kabul: Agency Coordinating Body for Aid Relief.
Warren-Rodriguez, A (2007) Putting Aid on Budget: A Case study of Mozambique, Mokoro Ltd, London, UK.
Weigand, C. and Grosh, M. (2008) Levels and Patterns of Safety Net Spending in Developing and Transition countries, SP Discussion Paper No 0817, World Bank, Washington DC, USA.
Wiseman, W. (2010) Private Correspondence on PSNP Wood, A. (2004) Presentation in UKDFID. Unpublished.
World Bank (2003) The Contribution of Social Protection to the Millennium Development Goals World Bank, Washington DC, USA.
World Bank (2006) World Development Report 2006: Equity and Development, World Bank, Washington DC, USA
World Bank (2007) Implementation and results report June 26 2007 (Report No: ICR000008), World Bank, Washington DC, USA.
World Bank (2008) World Development Report 2008: Agriculture for Development, World Bank, Washington DC, USA
World Health Organisation (2007) Maternal Mortality in 2005, World Health Organization, Geneva, Switzerland.